The General Statistics Office (GSO) calculates that a 1% increase in the disbursement of public investment will contribute 0.06 percentage points to GDP growth. Therefore, public investment is an important source of capital to attract others to invest in the economy, contributing to fueling production, business, and growth.
Progress from an urgent project
The project on the upgrade of runways and taxiways at Tan Son Nhat and Noi Bai International Airports, which have been deteriorating for over three years, was finally approved by the Government to be added to the list of medium-term public investment projects for the 2016-2020 period. Relevant procedures will be promptly implemented to start construction of the project in July this year.
The runways and taxiways at the two airports have been severely damaged since 2017 and need to be urgently upgraded or replaced with a total investment of nearly VND4.2 trillion (US$179.83 million).
However, the Airports Corporation of Vietnam (ACV), the operator of the two airports, was only allowed to make minor repairs due to obstacles in the arrangement of investment capital.
The ACV and the Ministry of Transport proposed three options to source funds for the upgrade project including the use of public investment, capital contributions from ACV and the difference between ACV’s revenues and expenditures for flight operation facilities.
The implementation of the upgrade project on the flight facilities of the country’s two largest airports at this time is appropriate due to low frequency of flights caused by the COVID-19 pandemic.
Public investment activities have showed positive signs in the first quarter of this year. Disbursement of public investment was estimated to have reached over VND61.59 trillion (US$2.61 billion) in the first three months of this year, equivalent to 13.1% of the year’s plan which is also higher than the rate of 11.2% in the same period in 2019.
Head of the GSO’s Construction and Investment Capital Statistics Department Nguyen Viet Phong said that a 1% increase in the disbursement of public investment will help Vietnam’s GDP expand by 0.06 percentage points. Approximately 91-93% of public investment was disbursed in the 2016-2019 period and if 100% of the planned public investment is disbursed in 2020, GDP is projected to increase by 0.42-0.54 percentage points this year.
In addition, a 1% increase in the disbursement of public investment will contribute 1.34 percentage points to the construction industry, leading to the expansion of a series of other industries, particularly the construction materials sector.
This is of significant importance to economic growth in the context that the COVID-19 pandemic has created a comprehensive impact on national socio-economic development.
Many drastic solutions proposed and implemented
According to Nguyen Viet Phong, public investment in the first quarter of 2020 thrived thanks to drastic reforms and direction from the Government.
2020 is the last year to implement the medium-term public investment plan and the 2016-2020 socio-economic development plan, thus, the Government is highly determined to disburse all public investment capital planned for 2020.
The Government also conducted early allocation and one-off allocation of capital for ministries and localities instead of multiple allocations of capital..
Moreover, the effectiveness of Investment Law (amended) since January this year has given more autonomy for ministries and localities to promote the disbursement of public investment and transfer capital from stagnant to other projects.
However, according to the Ministry of Finance, only eight ministries and sectors and 34 localities have disbursed over 15% of the assigned capital. 29 ministries and sectors and one locality have disbursed less than 5% of the planned capital while 21 ministries and sectors have disbursed less than 1% of the allocated capital.
To boost the disbursement of public investment in the remaining quarters of this year, the Ministry of Finance has asked ministries, sectors, localities, investors and project management boards to promptly complete investment procedures and allocate all planned capital in 2020 to relevant units. In addition, progress of large projects with pervasive influence on socio-economic development should be accelerated.
The Ministry of Planning and Investment has also proposed that ministries, sectors, and localities should focus on several solutions to promote the disbursement of public investment including speeding up the progress of public projects aligned with ensuring safety for workers amid the COVID-19 pandemic, building specific plans and measures to remove bottlenecks in land clearance and compensation for affected people, and requesting each investor to pledge an appropriate progress in their disbursement, among others.
The disbursement of public investment in 2020 conducted by ministries, sectors and localities will also be published on the portal of the Ministry of Planning and Investment as well as across the mass media.